In March 1995 the Spanish and Portuguese currencies were devalued by 7 and 3 per cent, respectively.

Inflation, which is always politically engineered, devalues currencies, debases trust and takes years to work its way out of investors' perceptions.

Analysts argue, for example, that China, widely considered to have played a constructive role in helping East Asia recover from the last crisis, did so by sticking to its market reform efforts and not devaluing its currency.